Panama – Tax and Accounting Regulations

A coherent offshore planning strategy is essential to maximise the effectiveness of offshore companies. Eltoma can assist by structuring the most tax efficient strategy to satisfy your requirements. Eltoma will guide you as to which jurisdictions offer the best tax structure by identifying the types of tax payable as well as the most favourable, tax efficient jurisdiction in which to incorporate.

Panama has increased its compliancy in recent years. In 2009 Panama converted to using International Financial Reporting Standards (IFRS) utilising accounting principles that complied with the International Accounting Standards Committee (IASC). This, along with other measures taken, has done much to improve the general perception of Panama as an offshore jurisdiction.

Panama employs a strictly territorial tax system. Due to this the only income earned from Panama is taxed, income derived from outside Panama is not subject to tax. Below is an overview of the tax and accounting regulations for Panama:

Non-resident Panama Companies are exempt from paying the following:

• Income Tax
• Capital Gains Tax
• Interest Income Tax
• Sales Tax
• Dividends Tax

Annual Franchise Tax:

• This is the only tax payable by non-resident offshore companies and is payable on the anniversary of the date of the original incorporation of the company.
• The annual franchise tax is approximately US$300. If the payment is not made before the deadline then a late delivery charge will be made.

International Aspects of Taxation:

• Panama has concluded mutual legal assistance treaties with the US, Costa Rica, Columbia and a number of other South American countries. These treaties cover serious crime but do not cover fiscal crime. The Panama Government does not submit to requests on fiscal matters.
• Panama has agreed to launch negotiations regarding an agreement towards a double tax avoidance agreement with Japan, Singapore and France. These have yet to be concluded.
• A number of anti-money laundering decrees have been agreed and implemented

Annual Reporting Requirements:

• There are no statutory accounting and audition requirements for a Panama IBC.